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ASX ANNOUNCEMENT DATE 11 May 2007
REF NO. 070509
SUBJECT Presentation to USA Investors
Attached is a copy of the presentation Richard Selwood, Managing Director Natural Fuel Ltd, gave at the recent Jefferies Clean Tech Conference held in New York.
The presentation focused on
Natural Fuel’s business model and global strategy and it’s development of Singapore, Darwin and Houston operations
Revenues to be generated by each of the plants in a full year of operation
Management strategy being undertaken to deal with such issues as feedstock, technology and operations
For further details regarding Natural Fuel Ltd, please contact:
Richard Selwood Managing Director Natural Fuel Limited P: 08 9286 6788 E: [email protected]
Anna Candler Managing Director 6 Hats Investor Relations P:02 9908 8815 E: [email protected]
Australia’s largest biodiesel producerBuilding an integrated global biodiesel operation
RICHARD SELWOOD | MANAGING DIRECTOREARL McCONCHIE | CEO - AMERICAS JEFFRIES CLEAN TECH | 2 MAY 2007
PAGE 2
Introduction
Natural Fuel Australia’s largest biodiesel producer
Multiple revenue streams – biodiesel, glycerine, carbon credits
Focus on international growth
Business model replicates oil industry distribution
Pro-active risk management processes
International and local partners – construction, feedstock,
Strong cashflows from 2008
PAGE 3
Natural Fuel business model
Integration with Fuel Industry
Production capacity
Multiple Revenue Streams
Feedstock
Industrial-scale production located at oil refining and fuel industry hubsUse existing fuel terminal facilities and services
Staged development of plants to meet industry growthTargeting bottom of international cost curve – strong cost managementSupply chain flexibility – operations in feedstock logistics hubsIndustry leading alliances with international companies
Biodiesel Distribution strategy builds strong revenue baseGlycerine Pharmaceutical grade 10% of revenuesCo-products All have commercial valueCarbon Not yet added into revenue calculations
Direct relationships with plantation owners/companies Existing supply agreements with ConAgra Trade Group Exploring owning own cropsActive participation in sustainable feedstock industry initiatives
PAGE 4
First three facilities
US$14.7mUS$123.1mUS$6.9mNPAT **
US$30.8mUS$130.3mUS$15.5mEBITDA **
AU$188.9mUS$530.7mUS$108.3mAnnual Revenue **
20092008S2 2007 / S1 2008Pivotal Year*
Q4 2008Q4 2007Jan 2007Start-up Date
US$65mUS$110mUS$42mCapital Cost
200,000 mta600,000 mta122,500 mta Plant Capacity - Phase 1
HoustonSingaporeDarwin
* Pivotal year = first year of full production **Based on (long term) assumptions: Palm Olein: US$500 MT FOB; Soybean oil US$580 MT FOB; 0.78 AU$:US$
PAGE 5
Case for Darwin
PAGE 6
Case for Darwin
History
Investment Criteria
Capacity
Markets
50:50 Joint Venture Babcock & Brown Environmental Investments (BEI)
Capability to add additional plantsEasy access to local and regional feedstocksHigher margins for diesel fuel in Northern AustraliaAbility to integrate distribution into local diesel fuel infrastructure
Biodiesel 122,500 mtaGlycerine 12,250 mtaSite capacity for additional 200,000 mta
Domestic Northern Australia – higher margins – transport and farmSydney & NSW regions – largest market for diesel
PAGE 7
Feedstock
Partnerships
Next Steps
Primarily RBD Palm Olein supplemented with Soybean Oil100,000 mta (~80%) contracted through ConAgraDirect plantation supply under negotiation
Lurgi Transesterification & pharmaceutical glycerine technology
Vopak Regional fuel/diesel distribution terminal; In-line blending
Finalise equipment installation to meet feedstock variabilityQuality Assurance & Environmental Assurance certificationOptimisation of plant’s operationsAchieve typical operating capacity (> 20% above nameplate)
Case for Darwin
PAGE 8
Case for Singapore
PAGE 9
Case for Singapore
History
Investment Criteria
Capacity
Markets
Construction began February 2007
Hub for US and European fuel marketsPlant expansion capability & fully serviced Good access to regional feedstock suppliesHigh financial returns; Pioneer Status = tax honeymoon 10+ years
Biodiesel Initially 600,000 mta; to be commissioned late 2007Glycerine Initially 60,000 mtaPhase 2 900,000 mtaPhase 3 900,000 mta
Primary USA West Coast;Secondary Northern Asia; China
Mining companies – Northern Australia
PAGE 10
Feedstock
Partnerships
Next Steps
Primarily RBD Palm Olein supplemented with Soybean Oil300,000 mta (~50%) already contracted - ConAgraDirect plantation supply under negotiation
Lurgi Transesterification & pharmaceutical glycerine technology
Vopak Regional fuel/diesel distribution terminal; In-line blending
Apply technology lessons learnt to construction and plant managementStaggered commissioning of the 3 x 200,000 plants during Q4 2007Quality Assurance and Environmental Assurance certification
Case for Singapore
PAGE 11
Case for Houston
Stolthaven Terminal
Natural Fuel site
Houston Shipping Channel
PAGE 12
Case for Houston
History
Investment Criteria
Capacity
Markets
Houston first site considered for NFLBoard approval to proceed April 2007
Integration into fuel industry infrastructurePlant expansion capability & fully serviced Good access to regional feedstock suppliesTexas government investment grant US$3m per yearCrude feedstock processing capability
Biodiesel Initially 200,000 mta – to be commissioned late 2008Glycerine 20,000 mtaPhase 2 300,000mtaPhase 3 300,000mta
Domestic Gulf Coast; Mid-West; East Coast fuel industry zonesExport Flexibility as required
PAGE 13
Feedstock Supply
Partners
Next Steps
Crude soybean oilReviewing market ConAgra to supply 200,000 mta
Connemann-ADM & Cimbria SketTransesterification & pharmaceutical glycerine
Stolthaven Terminal servicesStolt-Nielsen Logistic services
Finalise project financeFinalise appointment of contractor Apply lessons from Darwin & Singapore to engineering and construction
Case for Houston
PAGE 14
Risk Management
Biodiesel / Glycerine
Feedstock
Operations
Financial
Volume low contracts; market growthPrice medium market pricing; use of hedgingDistribution low relationships with oil majors;
independent distribution availableSupply low managed by contractsPrice medium blend of market pricing and direct
plantation supplies; use of hedgingTechnology low proven technologiesOperating low sector expertise; aligned resourcesEnvironment low operational policies & risk
mitigation policies/proceduresBusiness low demand exceeds supply
tax and government incentivesModel low oil industry distribution model
PAGE 15
Renewable fuel : way of the future
International multi-plant strategy
Scaleable business model : replicates oil industry model
Multiple revenue streams
Biodiesel plants have strong cash flow and deliver robust
financial returns
Natural Fuel
Australia’s largest biodiesel producerBuilding an integrated global biodiesel operation
PAGE 17
Appendices
PAGE 18
Glossary of Terms
AU$
US$
MT
mta
gallons
Australian dollars
US dollars
Metric tonnes1,132 litres300 gallons
Metric tonnes per annum
3.78 litres
PAGE 19
Biodiesel Industry Drivers
Legislation
Environment
Energy Security
Agriculture
USA – Biofuels Blenders’ Incentives legislative permanency anticipatedAustralia – Stable Clean Fuels Grant basis until 2016Europe – Increasing EU mandates and Member state mandatesAsia – Increasing standardisation of biofuel fuel blends, and prospective
mandates
Commercially viableEssential to reduce greenhouse gasesClean burning and cost effective
Reduce reliance on imported crude oilExtend crude oil reservesUS biodiesel industry reduces by 20% demand for crude oil by 2017
Provides new market for sale of grainsDependable revenue via forward purchase contractsRural development via job creation
PAGE 20
Summary Company Data
1.5 m$0.50
50.4 m$0.33Options(Exp 30/06/08)
62.8%Top 20 shareholders
3 million shares / monthAverage turnover
$0.755Low
$1.480High
12 month trading history
AU$ 270.2 mAU$ 130.0 mMarket capitalisation
337.8 m162.5 mNumber of shares
Fully dilutedUndilutedAs at 30 April 2008
26 April 2012Convert
$1.32Conversion price
8,000Number
Converting Bonds(Lead Broker: Jeffries International)
